There are (or were) adult entertainment industry in Hong Kong and Taiwan. Legality isn't a problem.
On Taiwan I am no expert at all,in the old days, I remember the "industry standard" were significant more conservative than HK and Japan. Typically the nudity only expose the breasts. Sex was mostly simulated or implied.
In HK, visible pubic hair is allowed, but not penis or pussy lips, even with mosaic (gosh... I could be totally wrong on this point too, it's really been so many years since I last brought an adult mag or watch a porn film from HK). Like TW, sex was mostly simulated or implied. Again disclaimer: I do not claim any level of accuracy or precision in this post.
The point is that the adult film industries in HK and TW were weak in the 80s. With one (very notable) exception, HK porn actresses never amount to anything. In fact you can't even call them porn actresses, since very very few women do porn as a career or main income source. Presumably they are career prostitutes or nightclub hostesses who perform porn films once every few years.
If they were weak in the 80s, now it seems kind of dead. I don't know how to explain it, perhaps every factor you can imagine is a contributing factor. Clearly internet piracy and JAV competition are important challenges. Legality is, I think, a minor factor. At least it's not banned outright (like in mainland China). But note that internet piracy and J- and K- TVs, films and pops are also present challenge to HK- and TW- films and pops, but while CAV is not economically viable against JAV somehow C-films and C-pop (C for Chinese and/or Cantonese?) can survive.
